What Can Philanthropy Learn from Corporate Responsibility Rankings?
December 13, 2012

(Emily Keller
is an editorial associate in the Corporate Philanthropy department at the
Foundation Center. A version of this post originally ran on
the Foundation Center’s PhilanTopic blog.)

As
philanthropy looks for examples outside of its own field for how to be more
transparent and accountable to its stakeholders, it might benefit from seeing
how the corporate social responsibility (CSR) movement has measured best
practices and facilitated disclosure for companies. Corporations have long collected data generated by and/or
relevant to their operations – everything from sales figures, to permit
applications, to industry trends and customer behavior. Increasingly, however,
regulatory and watchdog groups are demanding that companies provide information
about the impact of their activities on society and the environment.

Many corporations, here in the U.S. and around the globe, are disclosing a wide range of activities to ratings groups that are tracking a multitude of topics. But from climate change to human rights to corruption, we -- and they -- still have a long ways to go.

As the CSR movement has gained
traction, indices and lists that seek to quantify and rank company activities
according to sustainability principles have proliferated. Financial analysts,
media groups, and independent consultancies today produce annual assessments of
everything from the amount of carbon companies put into the atmosphere to the
sustainability of their supply chain management and the diversity of their
boards. Many consider transparency and disclosure in addition to performance.
Their metrics, in turn, are often used by customers, investors, and prospective
job candidates to determine their level of engagement with a particular
company.

Earlier this year, the Foundation
Center added a CSR tab to the company profiles in Foundation Directory Online that highlights nearly two dozen of these corporate
sustainability ratings lists and presents basic information from them in a
user-friendly format. The consolidation of ratings provides an additional level
of visibility to corporate data.

But in an emerging field
characterized by a multiplicity of definitions and standards, even simple
numbers can be hard to make sense of. Using hundreds of data points and a unique
methodology, SustainAbility,
an independent think tank and strategy consultancy, has taken it upon itself to
"rate the raters" in order "to better understand the universe of
external sustainability ratings and to influence and improve the quality and
transparency of such ratings." As the firm is quick to note, many of these
lists have been introduced within the last five years and there's plenty of
room for improvement.

With that in mind, here are a few of
the more prominent ratings lists/indices:

Dow Jones Sustainability Indexes. The Dow Jones Sustainability Indexes, which are offered cooperatively by SAM Indexes and S&P
Dow Jones Indices, were launched in 1999 to track the stock performance of the
world's leading companies in terms of economic, environmental and social
criteria. DJSI World tracks the top 10 percent of the 2,500 largest companies
in the Dow Jones Global Total Stock Market Index, while DJSI North America
tracks the top 20 percent of the 600 largest U.S. and Canadian companies. The
evaluation process includes a survey customized for fifty-eight industry
sectors covering disclosure of compensation, governance, workforce diversity,
risk and crisis management, greenhouse gas emissions, waste generation,
branding strategies and metrics, data privacy, talent attraction and retention,
and other areas. According to the DJ Sustainability site, "The indexes
serve as benchmarks for investors who integrate sustainability considerations
into their portfolios, and provide an effective engagement platform for
companies who want to adopt sustainable best practices."

Carbon Disclosure Project. Every year, the London-based Carbon
Disclosure Project (CDP), in partnership with PricewaterhouseCoopers,
produces a dense, chart-filled report detailing the progress of S&P 500
companies toward their greenhouse gas emission goals. Based on a detailed
questionnaire (the data collection process is so complex that CDP runs a series
of workshops around the world to help companies answer it), the 2012 report
offers a three-tiered breakdown of GHG emissions totals by sector; a
performance band from A to E assessing actions to promote climate change
mitigation, adaptation, and transparency; and a disclosure score from 0 to 100
for the provision of data. Multiyear leaders in the rankings include Bank of
America and Lockheed Martin in the performance category, and Cisco Systems,
Gilead Sciences, and Spectra Energy in the disclosure category.

Newsweek Green Rankings. In contrast to DJSI's rankings of only the most sustainable
companies, Newsweek ranks the five hundred largest publicly traded companies in
the U.S. as well as the five hundred largest in the world, regardless of their
sustainability record. And unlike the Carbon Disclosure Project's rankings,
only 10 percent of the scores are based on disclosure, with the remainder split
between environmental impact and management (a category that takes public
controversies into account). The magazine (which recently was purchased by The
Daily Beast site and is transitioning to an online-only format) includes more
than seven hundred data elements in its survey of companies, including
greenhouse gas emissions, solid waste disposal, water use, equity investment
(companies are responsible for the impact of the companies they own), hazardous
waste reduction, biodiversity protection, company operations, contractors and
suppliers, and products and services. Based on a scale of 0 to 100, IBM (82.9)
and Santander Brasil (85.7) topped the 2012 rankings.

The DiversityInc Top 50 Companies
for Diversity. Consulting firm and magazine
publisher DiversityInc, which launched its diversity rankings in 2001, bases its ratings on the responses it receives to
a 300-question survey. As the organization explains in the methodology section of its site: "Ratios between key factors in diversity
management, such as demographics of managers compared with managers who
received promotions and demographics of the workforce compared with people
promoted into their first management positions, play a significant factor in
determining point scores." Companies are rated by industry, and the
rankings include thirteen different top-five and top-ten lists. Topping the
list in 2012 were PricewaterhouseCoopers, Sodexo, Kaiser Permanente, AT&T,
and Procter & Gamble.

Corporate Responsibility Magazine's
100 Best Corporate Citizens.Corporate Responsibility Magazine and the Corporate Responsibility
Officer Association (CROA) began publishing their list, which is
100 percent based on verifiable publicly available information, in 2009. The rankings are driven by companies' performance in seven broad CSR
categories -- environment, climate change, human rights, employee relations,
corporate governance, philanthropy, and finance -- with some three hundred and
eighteen data points tracked across those categories. Carbon Disclosure Project
and Foundation Center data are incorporated into the assessments.

And that's just a sampling. Indeed,
the diversity and number of CSR ratings lists now available can be overwhelming
at times -- for consumers and investors, as well as for companies, which
receive a plethora of detailed surveys and questionnaires from dozens of groups
seeking to track their activities and do not always understand the reasons they
are selected or omitted from a given list.

In an effort to standardize the
ratings process, Ceres and the Tellus Institute, founders of the Global
Reporting Institute (GRI), recently launched the Global
Initiative for Sustainability Ratings
(GISR), which aims to establish best practices in the sustainability ratings
field, with a focus on transparency of methodology, performance-based results,
forward-looking indicators, relevance to market forces, integration of
sustainability criteria into investment decisions, independence of raters, and
an expansion in the scope of participating companies. The initiative hopes to
release the initial draft of its standards in 2013.

In the meantime, the number and
scope of CSR ratings lists continue to grow. Last year, the Center for Corporate Citizenship at Boston College, in partnership with the Reputation Institute,
released its fourth annual list of the top fifty companies in the U.S. based on
the public's perception of their corporate citizenship, governance, and
workplace practices. And earlier this year, Bloomberg New Energy Finance and
Vestas released their third annual Global Corporate Renewable Energy Index (CREX) report, which tracks voluntary demand for renewable
energy among the world's largest companies.

Other entrants in the field include
the UN Global Compact,
which asks companies around the globe to embrace universal principles and
partner with the United Nations in the areas of human rights, labor,
environment, and anti-corruption issues, and A
Billion + Change, which seeks to mobilize billions
of dollars of pro bono work and skill-based volunteerism by the end of 2013.

Is any of this work making a
difference? I believe it is and, having compared some of the largest lists
against our corporate FDO profiles, can see that many corporations, here in the
U.S. and around the globe, are disclosing a wide range of activities to ratings
groups that are tracking a multitude of topics. But from climate change to
human rights to corruption, we -- and they -- still have a long ways to go.

What do you think? Is CSR a movement
whose time has arrived? What can philanthropy learn from the CSR field? Are CSR
ratings a useful tool for consumers, investors, and transparency advocates? And
if not, how can they be improved? Share your thoughts in the comments section
below.

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Transparency Talk, the Glasspockets blog, is a platform for candid and constructive conversation about foundation transparency and accountability. In this space, the Foundation Center highlights strategies, findings, and best practices on the web and in foundations–illuminating the importance of having "glass pockets."

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